March 2026 HR Updates:

First Quarter Impact: Minnesota Paid Leave

The Minnesota Paid Leave program officially launched on January 1, 2026, covering most employers in the state.

PFML Basics

As a reminder, the new law provides:

• Family Leave. Providing paid time off to bond with a child through birth, adoption, or foster placement; to care for a family member with a serious health condition; to care for a military family member called to active duty; and to respond to personal safety issues such as domestic violence, sexual assault, or similar.
• Medical Leave. Providing paid time off for an employee when a serious health condition prevents the individual from working.

Eligible individuals are entitled to a maximum of twelve weeks of family leave or a maximum of twelve weeks of medical leave in one benefit year. If an individual uses both medical and family leave within a single benefit year, paid leave maxes out at twenty weeks.

PFML Payments

Payments are made weekly once a leave is approved. Individuals approved for payment can elect direct deposit or prepaid debit card. According to Minnesota Department of Employment and Economic Development (DEED), payments via direct deposit take three to five days to process once payment is sent by the state.

PFML Controversy

The program has generated controversy across the state and especially with small employers. Some small employers embraced the program as “leveling the playing field” to allow them to compete with larger employers in providing paid leave benefits. Other small employers approached the program with a sense of dread, wondering how they will cover a potential twenty-week absence with an already small staff and difficulty hiring temporary employees.

PFML Early Stats 

Two and a half years after Governor Walz signed the original bill, the Governor reported in early January the program was launched on time, under budget, and with full functionality.

DEED announced on January 12th that the first round of payments were sent to over 2,600 Minnesotans. The average weekly payment was $1,153.  DEED announced that of the more than 25,000 applications received thus far, it had reached a determination on over 10,000, with two-thirds being approved.

Income and Taxes

An area that has generated questions from employers and employees alike is the taxation of benefits. According to information published on the Paid Leave website:

• Are Paid Leave benefits considered wages? “Not for 2026. The IRS has delayed implementation of new requirements until 2027. Benefits do not need to be considered wages and do not need to be reported on an employee’s W-2.”
• Are Family Leave benefits considered income? “Yes, 100% of Family Leave benefits are considered income.”
• Are Medical Leave benefits considered income? “Only the portion of Medical Leave benefits that is attributable to an employer is considered income.”

Preventing Fraud

With the recent issues in Minnesota, the program has been under scrutiny. DEED, Paid Leave, and Governor Walz have assured Minnesotans the “program launched with strong systems in place to verify identities and work histories and to detect and prevent fraud.”